Mortgage loans usually have lower interest rates than other types of unsecured financing. The reason is the backing of valuable property. When the lender auctions off your property in the event of default, they may be able to realise a value greater than the outstanding balance due to the appreciation in the real estate's value over time.
A loan against property offers flexibility to use the funds. Your lender never asks to provide reasons for submitting a loan application with them. It is useful if your child becomes ill while studying abroad and seeks immediate medical attention. A mortgage loan can assist you in meeting your treatment costs. You can also use the money to book your own flight tickets from India to the country where your child is studying.
The EMI, repayment term, and interest payable are all linked. This loan is typically available for a maximum of 10 years. However, the lender allows you to select the desired tenure using the loan against the property EMI calculator. Let's look at why this is important when applying for a loan.
Parameters | Repayment Period | ||||
---|---|---|---|---|---|
1-Year | 3-Year | 5-Years | 7-Year | 10-Year | |
Loan Amount | Rs 60,00,000 | Rs 60,00,000 | Rs 60,00,000 | Rs 60,00,000 | Rs 60,00,000 |
Interest Rate | 10% | 10% | 10% | 10% | 10% |
Rs 5,27,495 | Rs 1,93,603 | Rs 1,27,482 | Rs 99,607 | Rs 79,290 | |
Interest Payable | Rs 3,29,944 | Rs 9,69,712 | Rs 16,48,936 | Rs 23,66,997 | Rs 35,14,853 |
Total Payable | Rs 63,29,944 | Rs 69,69,712 | Rs 76,48,936 | Rs 83,66,997 | Rs 95,14,853 |
You have two choices: make your EMI more affordable by extending the tenure or save money on interest payments by choosing a shorter tenure. So, whatever you decide, make sure your budget allows for it.
Also Read: Mortgage Loan Interest Rate: Everything You Want to Know
Not every real estate property is mortgage-worthy. The lender may refuse to approve an education loan on agricultural land or property that has not been approved by the city's development society.
If the property you want to mortgage has multiple leaks, broken walls, or was built more than a half-century ago, then the lender may reject your loan application against this property as mortgage, it may not be approved for a loan.
You should only consider a mortgage education loan if the course you want to enrol in requires significant funding. Applying for a mortgage makes no sense if you want to pursue courses like B.Com, B.SC, or technical certification like PGDCA.
Make sure you have a solid repayment plan when applying for an education mortgage loan. Always keep in mind that if you miss an EMI regularly, the lender has the authority to auction off your property to recoup its losses.
Choose a lender. Before deciding on a financial institution, compare their rates and offers, as well as their eligibility criteria, which are available on their official website.
Choose an application mode. Financial institutions allow you to apply online through their website or in person at their branch office for offline submission.
Fill out the form. Share your basic information like name, address, contact number, employment status, and income. Furnish documents supporting your credentials.
The lender verifies your basic information in the first step. And in the later stage, they will conduct a physical inspection of the property in question.
If the lender is satisfied with the condition of the property and is confident that the likelihood of default with your profile is low, you will be easily approved for an education loan against the property.
Education mortgage loans are ideal for higher-cost courses such as MBBS or MBA. However, for other courses with low tuition fees, you can apply for a personal loan for education purposes. Like a mortgage loan, this loan product also comes with flexible tenure and usage. However, the maximum repayment term is limited to 60 months, with a funding limit of Rs 500,000.
Also Read: 3 Strategies to Help You Pay Off Your Mortgage More Quickly
The best way to fund your child's higher education is through an education loan against property. It is available for longer terms of up to ten years, and the interest rates are also lower than those of other financing products on the market. Furthermore, you can use the funding to pay your child's college fees while also using it for other commercial or household purposes.
Hero Fincorp offers a wide range of financial products including Personal Loans for personal needs, Business Loans to support business growth, Used Car Loans for purchasing pre-owned vehicles, Two-Wheeler Loans for bike financing, and Loan Against Property for leveraging real estate assets. We provide tailored solutions with quick processing, minimal paperwork, and flexible repayment options for smooth and convenient borrowing experience.